Strategic management chapter 1
Strategy is the direction and scope of an org over the long-term, which achieves advantage in a
changing environment through its configuration of resources and competences with the aim of
fulfilling stakeholder expectations.
Characteristics of strategic decisions
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Long-term direction
The scope of an organisation’s activities
Advantages being obtained over competitors
Strategic fit with the business environment- addressing change in the business environment
The organisation’s resources and competences- strategy is about exploiting the strategic
capability of an org, to provide competitive advantage and/or yield new opportunities.
 The values and expectations- of powerful actors in and around the org who can drive
fundamental issues within it.
The above are likely to:
 Be complex in nature- defining feature of strategy and strategic decisions, especially so in orgs
with wide geographical scope.
 Be made in situations of uncertainty- inherent in strategy, as no one can be sure about the future
 Affect operational decisions- if operational aspects are not in line with strategy then you will not
succeed. Competence in particular operational activities might determine which strategic
development might make more sense
 Require an integrated approach, inside and outside the org- managers have to cross functional
and operational boundaries to deal with strategic problems and come to agreements with other
managers who might have different interests and priorities.
 Involve considerable change- crucial component as it is often difficult due to the heritage of
resources and because of organisational culture.
Levels of Strategy
Corporate level strategy
This is the top level, which is concerned with the overall scope of an organisation and how value
will be added to the different parts of the org- geographical coverage, diversity of products/services,
and how resources are to be allocated between different parts of the org. Also concerned with
expectations of the owners (shareholders and stock market). Can take form in an explicit/implicit
mission statement. Being clear about it is important.
Business-level strategy (otherwise known as competitive strategy)
This is the second level which is about how the various business included in the corporate strategy
should compete in their particular markets. In the public sector, this typically concerns issues such as
pricing strategy, innovation or differentiation.
Operational strategies
This is the third level, which is concerned with how the component parts of an org deliver effectively
the corporate- and business-level strategies in terms of resources, processes and people. Successful
business strategies depend to a large extent on decisions that are taken, or activities that occur at the
operational level.
Vocabulary of strategy (not all terms are used in orgs or strategy books)
Mission- overriding purpose in line with the values or expectations of stakeholders
Vision or strategic intent- desired future state: aspiration of the organisation
Goal- General statement of aim or purpose
Objective- quantification (if possible) or more precise statement of the goal
Strategic capability- concerned with resources and competences that an org can use to provide value
to customers or clients. Some will be unique and provide ‘competitive advantage’
Strategies- long-term direction
Business model- how product, service and information ‘flow’ between participating parties
Control- the monitoring of action steps to i) assess effectiveness of strategies and actions; ii) modify
as necessary strategies and/or actions
Strategic management
It underlines the importance of managers with regard to strategy as they do not happen just by
themselves. Strategy involves people, especially managers who decide and implement strategy.
It is concerned with complexity arising out of ambiguous and non-routine situations with
organisation-wide rather than operation-specific implications.
It is thought to have three main elements which are the strategic position of an org, strategic choices
for the future and managing strategy in action.
Strategic position
The environment- org exists in the context of a complex political, economic, social, technological,
environmental and legal world. This environment changes and is more complex for some orgs than
others. Many of these variables will give rise to opportunities and others will exert threats on the
org- or both. One problem that must be faced is that the range of variables may be so great that it
may not be possible or realistic to identify and understand each one.
The strategic capability- made up of resources and competences. One way of thinking about this is
to consider the strengths and weaknesses. The aim is to form a view of the internal influencesconstraints- on strategic choices for the future. It is usually a combination of resources and high
levels of competence in particular activities that provide advantages which competitors find difficult
to imitate.
Purpose- is encapsulated in an organisation’s vision, mission and values.
Culture- these influences can organisational, sectoral or national. Historical influences can create
lock-in on particular strategic trajectories. The impact of these influences can be strategic drift, a
failure to create necessary change.
Strategic Choices
This involves the options for strategy in terms of both the directions in which strategy might move
and the methods by which strategy might be pursued.
Business level- strategic choices of how the org seeks to compete. Typically they involve pricing and
differentiation strategies and decisions about how to compete or collaborate with competitors.
Corporate level- concerned with the scope, or breadth, of an organisation. These include
diversification decisions about the portfolio of products and the spread of markets. It is also
concerned with the relationship between the separate parts of the business and how the corporate
‘parent’ adds value to these various parts.
International strategy- is a form of diversification, into new geographical markets. It is often at least
as challenging as diversification. One needs to prioritise which ones to enter and how to do so, by
export, licensing, direct investment or acquisition.
Innovation- at the start of every org is an act of entrepreneurship. Most orgs have to innovate
constantly simply to survive. Innovation choices involve issues such as being first-mover into a
market, or simply a follower, and how much to listen to customers in developing new products or
services.
Evaluation- orgs need to make decisions about the methods by which they pursue words by building
new businesses with their own resources. Other orgs may develop by mergers/acquisitions and/or
strategic alliances with other orgs.
Strategy in Action
This is concerned with ensuring that chosen strategies are actually put into action.
Strategy of development processes- the strategies that an org actually pursues are typically a mixture
of the intended and the emergent. Intended strategies are the product of formal strategic planning and
decision making, but that strategy that is actually pursued is typically somewhat emergent, including
bottom-up inititatives, rapid responses to unanticipated opportunities and threats and sheer chance.
Structuring- an org to support successful performance. This includes organisational structures,
processes and relationships (and the interaction between these elements).
Resourcing- strategies in the separate resource areas (ppl, info, finance and tech) of an org in order
to support overall strategies. The reverse is also important to success, that is the extent to which new
strategies are built on the particular resource and competence strengths of an org.
Strategic Change- managing strategy very often involves strategic change. This will include the need
to understand how the context of an org should influence the approach to change and the different
type of roles for people in managing change. It also looks at the styles that can be adopted for
managing change and the levers by which change can be effected.
Practise of strategy- the overall processes of strategy development and change to look at the detailed
activities involved- the people included in strategy, the activities they have to do and the kinds of
methodologies they use to do it.
Strategy Lenses
This is four different ways of looking at the issues of strategy development for an organisation. In
brief, these four lenses are:
Strategy as design
This takes the view that strategy development can be a logical process in which the forces and
constraints on the org are weighed carefully through analytic and evaluative techniques to establish
clear strategic direction. This creates conditions in which carefully planned strategy implementation
should occur. The design lens usually grants top management the leadership role in strategy, with
middle and lower management given supporting roles in implementation. It is the traditional
textbook view.
Strategy as experience
Future strategies of orgs are heavily influenced by the experience of managers and others in the org
based on their previous strategies. Strategies are driven not so much by clear-cut analysis as by the
taken-for-granted assumptions and ways of doing things embedded in the culture of orgs. Different
views and expectations within the org exist, they will be resolved not just through rational processes,
but through the processes of bargaining and negotiation. The view here, is that there is a tendency
for the strategy to build on and continue what has gone on before.
Strategy as ideas
This lens emphasises the importance of promoting diversity in and around orgs, which can
potentially generate genuinely new ideas. Here strategy is seen as not so much planned from the top
as emergent from within and around orgs as people respond to an uncertain and changing
environment with a variety of initiatives. New ideas will emerge, but they are likely to have to battle
for survival against other ideas and against the forces for conformity to past strategies.
Strategy as discourse
This lens sees strategy as in terms of language. Managers spend most of their time communicating.
Therefore command of strategy language becomes a resource for managers by which to shape
‘objective’ strategic analyses to their personal views and to gain influence, power and legitimacy.
Approaching strategy as a discourse makes managers very attentive to the language in which they
frame strategic problems, make strategy proposals, debate issues and then finally communicate
strategic decisions. The language of strategy, and the concepts that underpin that language, can
shape the strategy agenda in terms of what is discussed and how.